Bank predicts economic boom

THE country’s economic growth will rebound this year driven by the oil and gas sector and growth momentum to be sustained into next year, according to an ANZ Bank report.
“For now, we are forecasting gross domestic product (GDP) to grow by 3.4 per cent in 2019 and 3.8 per cent in 2020,” says the bank’s Quarterly Economic outlook released on Wednesday.
“We expect production at the PNG LNG plant to return to about 8.7 million tonnes this year, pushing oil and gas sector output up by 6.2 per cent.
“This will add 1.2 percentage points (ppt) to GDP growth this year.
“We expect non-mining business investment to also improve.
“As the time taken to settle import payments declines and with some certainty on strong-medium-term economic prospects – following the signing of the Papua LNG gas agreement – we expect non-mining businesses to shift away from a cost-cutting, survival and investment deferring mode one to one of pursuit of growth.
“Meanwhile, public demand is anticipated to be solid as we expect the budget deficit to be fully funded.
“Importantly, construction will take over as the driver of economic growth from next year.
“As we discuss later in the report, construction draws input from several other industry sectors and is labour intensive. Hence, 2020 will feel like a stronger economy.
“In 2019, LNG exports account for nearly a third of growth, but it is not as labour intensive.
“We expect both PNG LNG Train 3 and PNG’s first offshore gas field, Pasca A, to move to commencement by the end of 2020, with Papua LNG expected to start in early 2021.
“By then, the anticipated Ramu NiCo mine upgrade will be well under way, assuming the variation to the special mining lease that the management is seeking is formalised with the State this year.
“These, combined with the start of the Wafi-Golpu gold-copper project, the Sepik Development project (which takes in the Frieda River copper-gold project) plus asset renewals and brownfield extensions at existing mines will push activity to a higher plane well into the next decade.
“The overall gas and mining investment, next decade, will almost certainly surpass the 1990s resources boom, underwritten by the copper and gold expansion at Ok Tedi, the Kutubu oil project and Porgera gold mine.
“Hence, we are calling the next resource investment cycle a ‘super cycle’. The volume of construction work will be further boosted by projects under the national electrification programme and road investment funded by a stronger fiscal position (the State’s original PNG LNG debt will be repaid by the middle of next decade).”